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tv   Power Lunch  CNBC  October 2, 2012 1:00pm-2:00pm EDT

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>> testify virginia pharmaceutical, october call options. >> weiss? >> i would short any of the materials stocks, iron orr, steel. take your pick. >> guy? >> am jen. >> that does it for us. halftime is over. the second half of the trading day starts now. >> halftime is over around a powerlinup for the second half on today's power lunch. first, a pound of flesh. a first on interview with new york's attorney general eric schneiderman, going after the jpmorgan for the whole mortgage mess. why now and who could be next? women ask. seat at the table. an exclusive interview with treasury's lael brainard, the behind-the-scenes go-to person making deals with europe and china. is any progress being made there? and then, penny for his thoughts, details of an exclusive interview with jc penney's ceo, ron johnson. how long before his grand turn
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around plan shows results? and a bit of a turn around for the markets. are we -- we are down as we come on the air. sue herera, by 60 points? >> that's right, ty, a modest decline. yesterday when we started here, we were up triple digits, today, both the dow and the s & p lower, profit taking perhaps or something more. let's get the trading action here with bob pisani joins me from the floor. i would say it is a little profit taking. we still have a a lot of data points we still have the employment report out on friday and we'd big triple digit advance in the dow. >> very frustrating to say we are still moving on europe. happenness every day makes people crazy, look at the dow jones industrial average, waiting for spain to ask for a bailout request. it is that simple. 11:15, 11:30, the prime minister of spain came caught and said you listen, we are not going to
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make any requests imminently, we don't know what the word imminent means. don't know if it's going to be a week, two weeks. >> and the market dropped on that knew you can see slowly starting to come back. look at the major sectors, the bottom line today this is one of those indeterminate days, hard to determine exactly where the marget should be going based on this you notice the tears, sue, weaker than the rest of the market. the fertilizer is to the downside, mosaic, weak numbers, the demand for fertilizer strong in the united states. they have trouble getting it to people because of the mississippi river was low and hurricane isaac was a problem. >> we will talk to you later. i want to ask but the transports. bob pisani, ty, back to you. >> thank you. consumer spending making up 70% of the u.s. economy, this holiday shopping season a key gauge on whether this sluggish economy can shift into a somewhat higher gear. new numbers out today from the world's largest retail trade association, the nrf, says u.s. retail sales should rise 4.1% this holiday season. pretty merry. don't get too excited. that is actually slower than the growth the past two years. so, why the slow down in the nrf
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says the biggest things holding consumers back is uncertainty over the economy and whether congress can strike what deal and avoid the so-called fiscal cliff. one major retailer hoping for a merry holiday season is jc penney. ceo ron johnson continues to outline his plans for the struggling chain store. the stock down 30%. johnson speaking on the record and excuse swivel our courtney real been the state of his business. courtney? >> hi, tyler, good afternoon. jc penney ceo ron johnson has just begun speaking. the toirng the rocky road to reinventing retape. spoke with johnson exclusively before he took the stage at the event. now, 700 of the total 1100 jc penney stores are being outfitted with shops. when i asked johnson what his plans were for the remaining 400, the first time, he said they are going to dram dramatically improve the presentation and product in those stores. actually give willing his employees details for the first time today at 4:00.
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johnson said jc penney will participate in black friday, too but in their fair and square way and said if you liked what they did with free haircuts, you are going to love what they are announcing november 1st for holiday. but it has been a rough 250 days, tougher than johnson expected. he said his biggest lesson so far is learning what customers want it will take four years for the full transformation, johnson expects the hardest part to be over by christmas and expects to grow in the first quarter of 2013. now, i asked ron johnson what his christmas wish was and he said traffic. shoppers will love what they see once they are here. legs look at each of the individual automakers and how he did here in the u.s. last month. a couple of numbers stand out. toyota coming in better than
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expected with a gain of 41.5%. gn and ford inline with analyst estimates. the best monthly seams ever for the chevy volt, selling more than 2800. earlier today, we had a chance to talk with the vp of sales whether or not gm is throwing $1.0,000 incentives into those transactions in order move the volt. he says that number is overstated. >> it's less than that, phil. obviously we don't talk about what we are specifically spending on any particular vehicle. we think it is the right place to be competitive in the marketplace. like i said it is a much bigger story to tell than just a monthly story. >> as you look at shares of general motors today, see bit of that move there in the last hour and a half, that's when david einhorn from green light capital told our kate kelly he likes
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gm's valuation here. he consider it is cheap. also says that gm could be break even in europe in three years. remember, they are on track to lose more than $1 billion in europe this year around he says gm has improved costs and a cleaner balance sheet. that's why he likes general motors, sue. if you take a look at that stock the last year or over the last month, tyler, it's up more than 11%. store, has been moving higher and those comments today from einhorn certainly giving it a boost. >> phil lebeau, thank you very much. politics now, president obama and governor mitt romney putting the finishing touches on their preparation before the big debate tomorrow night but will the debates make a big difference? brand new nbc news/"wall street journal" poll released just this minute looks at how closely people will be watching >> eamon javers in washington now with the latest. >> the stakes did just get a little bit higher for those debates in the presidential level this week. take a look at these results now from the new nbc news/"wall street journal" poll which we can bring you. the question asked to voters how
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important is the debate in picking a president? 38% staying is extremely or quite important. as you can see, that's higher than the respondents said in 2004 and in 2000. that's an interesting number but also interesting the folks who said it was somewhat or not at all important at 62%. that may be an indication that a lot of people in this country have already made up their minds, tyler. that might mean things are tough for those candidates who want to shake things up with this debate this week. >> very interesting. thank you very much a reminder to all of you tomorrow, president obama, governor romney do kick off the first of three presidential debates and cnbc will carry it live. our coverage begins at 8 p.m. eastern time. it's your money, your vote. sue? ty, the financial crisis haunting america's biggest bank, jpmorgan being sued by new york attorney general eric schneiderman, claiming that the bear sterns business that jpmorgan took over in 2008 defraud mortgage bond investors
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a are. our senior correspondent scott cone has been working on the case. scott? >> sue, under the head nothing good deed goes unpunished, if how you characterize the takeover of bear stearns, the federal government for the $10 a shake jpmorgan got not only bear stearns' assets but liabilities, including, authorities say responsibility four some of the most egregious conduct in the financial crisis you churning out residential mortgages by the thousands, bundling them into what the firm told investors were quality securities, knowing all along many of the mortgages were duds a systemic fraud on thousands of investors, the lawsuit says, deceiving them about the fundamentally defective character of the mortgages and went housing bubble burst, those investors are suffered monumental loss, jpmorgan plans to contest the suit and disappointed with the ag for bringing the case and says it is the first product of a presidential working group on american securities fraud formed in january. today in washington, officials
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signal it had won't be the last case. sue? >> scott, stay with me. we are going to talk about this joining us first on cnbc to discuss the lawsuit is new york attorney general eric schneiderman. welcome, sir, pleasure to have you back with us on "power lunch." >> thanks, sue. good to be here. >> you know, the timing ofthy find extremely interesting and the target i find extremely interesting. jpmorgan took over bear sterns at the behest of the government government, they didn't want to buy this bank. they only had a weekend to do whatever due diligence they should do so, why are you bringing this complaint against jpmorgan since he did what the government asked them to do? >> well, we started our investigation in the new york attorney general's office last spring and we were looking a at variety of institutions. the federal working group was founded by president obama in january and formed in months after that and started working with our federal colleagues who also had substantial information
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and pro-ed a lot of assistance in going after the misconduct at bear stearns, which quite frankly, was some of the most flagrant misconduct by any firm in the bundling and security z securitization of mortgage-backed securities. >> that took place before jpmorgan bought that. >> as the introduction said, when you buy a firm, you get the assets and you get the liabilities and we can't send a message that this kind of flagrant fraud, i mean, misrepresentations that they were monitoring the loans that went into the securities, their words, robust and intense due diligence process when all was a sham, internal evidence it was a sharnlg the third party due diligence providers have said it was a sham. you can't, as a prosecutor, allow this conduct to unpunished and send the message there is one set of rules for one group of people and another for others. we brought the case because it was ready, the first case ready.
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we are by no means singling them out. we expect to bring actions against a variety of institutions working with our federal counterparts, some of them-actions by my office, that is case s some by others. we are going after the systemic fraud that created the bubble that blew up the american economy. is kind of important for people to get the message that there be accountability for that type of misconduct. >> you basically laid the entire collapse of the housing market at the feet of bear sterns. you say that you were going to go after other firms. let me just ask you, given the fact that jpmorgan certainly did buy the liability bus bought the company at the behest of the government is it not a disincentive, say we go through another financial crisis and you need another big bank to step up to the plate at the government's request, isn't there a disincentive for them to help the government out if, indeed, you're going to turn around and then penalize them for doing exactly what you asked them to
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do, which is buy the liabilities as well as the assets? >> well, that's right. but that's what happens when you make an acquisition. this is a period of time in which banks were getting and were asking for major capital infusions to save themselves. a lot of people out there in may, think there were too few conditions put on the banks that got bailed out. in my -- federal prosecutors -- >> jpmorgan skills that not a-- jpmorgan chase did not ask for t.a.r.p. >> they took advantage of t glad the banking system was saved. glad president obama followed through and i think the right thing to do but if anything, i think the criticism that has arisen in the a last few years, there probably were too few strings aand, especially after the bone bown us ins started flowing again this is not to pick on jpmorgan chase. i assure you, looking at a wide variety of firms. this conduct was particularly
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flagrant. there have been other action brought that laid some groundwork that we took advantage of so we weren't wasting taxpayer money by reinventing the wheel, the fhfa brought a major case and the fhfa inspector general is one of our partners in the working group as well as justice, the s.e.c., hud and others. so, we are co-will be a bore writing bring as many actions as we can as quickly as we can, this just happens to be the first. >> attorney general schneiderman, four years now since the depths of the financial crisis thursday is the first gates gait for the president out of the working group for securities fraud is this the pound of flesh, everyone pushing for accountability forth banks on wall street, we are going after conduct, a firm that no longer exists in terms of bear stearnss, is this what we are going to get, no individuals here? >> no this is just the first step, keep in mind that my -- i got into office a little over a year and a half ago, we started our investigation last spring.
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we first issued a subpoena to jpmorgan about the bear stearns conduct last june. extensive interchange with their attorneys since then. the working group has got going in the last six months. there will be more case there will be more inquiries, different kinds of cases brought, nothing is off the table. i assure you, this is an important step but just a first step. >> mr. attorney general, we have to let you go thank you very much for spending time with us. we appreciate it. >> all right. thank you, sue. >> so which other banks could be next in the firing line? we are going to take a deep dive on that particular topic coming up in the next half hour. ty, over to you. >> sue, thank you. she is america's top financial diplomat, the treasury department's behind the scenes go-to person making deals with europe over in china. she rarely gives interviews but next on "power lunch," giving an exclusive to our steve liesman. lael brainard, u.s. undersecretary for international affairs, just ahead.
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too europe now, where there is fresh concern about spain and whether and when it might ask for bailout and if so how big it could be. our next guest is part of an exclusive club and knows probably more about the european crisis and how it's impacting
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our economy than just about anybody. so how exclusive is her access? look at this picture from the g-20 summit two years ago, lael brainard is the key u.s. representative and incidentally, the only woman in the group. today, she is steve liesman's special guest. steve? >> tyler, thanks very much. she has been called america's top financial diplomat and is a special guest at a fortune magazine most powerful women conference in california. lael brainard joins us now. welcome to "power lunch," lael. >> it's a pleasure to be here. >> let's talk what tyler was talking about, this issue of spain and the question of whether or not it's going to ask for aid and trigger that ecb program. is it your opinion, the opinion of the u.s., that the europeans are following through on their latest set of commitments when it comes to solving their financial crisis? >> well, you're right, they've made a series of very important commitments over the course of the summer and into the fall. they are much better prepared. they have a set of tools that
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can help governments like spain continue to access the markets at affordable rates while they continue making these very challenging reforms. we have seen a number of developments in spain in recent days. we have seen a budget come out that continues to bring the deficit down to sustainable levels. europe has pledged to work in partnership with spain to make sure its banks get recapitalized and continue to afford a access the markets. we will see as they work in the partnerships the days ahead again, they have the tools and we see the political will on the part of the spanish go >> you watch spain, you just got back from china. i have a bunch of questions about china, stories in the paper, lael, in china is the first question, the second question is the republican nominee, mitt romney, has
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accused the obama administration of not being tough enough on china. the third question you have a report coming out october 15th on whether china is a currency manipulator. what are you going to say? >> well, let me just start with your first question. china's leadership team is undergoing a transition process and confront important questions how they are going to take forward their economic policy. steve, as you know, since day one, president obama's been extremely focused on achieving a more balanced relationship with china, one that create more opportunities for our workers, for our businesses, to export, to sell into china's growing market. we have invest ready considerably with a lot of engagement with china's economic decisionmakers to make sure as they continue to navigate their recovery, they do so in a way that creates export opportunities and we have seen
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results. we have seen their overall imbalance come down from 9 percentage points of gdp to 3 percentage points of gdp, seen u.s. exports to this market doubling, growing faster than to any other market and importantly, the chinese currency has appreciated by 11 to 12% in real terms against the u.s. dollar. so the president's strategy of engagement, of using trade tools to take tough cases to the wto we think is achieving very important results for america's works. >> ms. brainard, tyler mathisen here. i wound if as you speak to leaders in china, europe or indeed, around the world, whether two things make your job easier or harder. the first thing is the fiscal deadlock and the fact that we don't seem able, between the administration and congress, to get our fiscal house in order. the other thing is sort of the lack of competitive standing and power economically that we have. do those two things and specifically you most importantly, the fiscal stance,
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do they make your job tougher? >> let me just say that the u.s. continues to play a disproportionate role in the international financial system. and we, i think, have earned that we came back very quickly from the financial crisis, we moved quicker than any other country to clean up our financial system to ensure that our banks would be better capitalized. as you know, we moved quicker here to raise private capital in the market. a much strong financial system today. we have seen steady growth in the private sector. the u.s. continues to i think have strengths that are the envoift world, particularly in the private sector, particularly when it comes to innovation. leaders looking at the u.s. and how we are going to manage our fiscal challenges going forward. i think there is a lot of support for the president's approach, which is to work for a balanced plan, one that brings our deficits down, put ours debt
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on a declining path over the medium term while we continue to ensure that the recovery is support. he has put forward a plan that has $2.5 of expenditure cuts for every dollar in revenues and we think there is a lot of ability for american legislator he is, the president, to come together and to navigate a path forward that achieves those two things, balanced deficit reduction and supporting the recovery in the shrun. >> undersecretary brainard, you can't help but be struck by the picture we showed from the g-20 summit in korea a couple of years ago. wither going to put it up again. and the fact that you're the only woman in that group of men right there. we have to ask you, apropos, of the conference you are at, being woman, does it help, does it hurt, does it make no difference when it comes to the kind of negotiating you do on the international economic level? >> well, it's a good question. you know, when that picture was
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taken, i had been in those meetings for well over a year at that juncture. and you know, they took a picture of the group they distributed it all of our places and it was great. one of my male colleagues picked up the picture, looked at me and looked at the picture and said, hey, do you know you are the only woman in the room? i think it speaks to many of my dlaegs it did not matter to them. of course, i had noticed and of course with dough need to keep making progress. if you look around the g-20, we see more women leaders, we see more women foreign minister bus it is still very thin on central bankers and finance minute officers and one of the reasons i'm out here today, there are a lot of women making a difference in the economy here in the united states and we need to continue bringing along young women as they make a career paths in this area. >> all right. madam undersecretary, steve liesman, thank you very much. we appreciate your being with us from california today. and another big interview --
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>> it's a pleasure. thank you. >> terrific. another big interview you won't want to miss, our next guest really has the pulse of europe and the u.s. right now with his global business. sir richard branson will join sue just now on first on cnbc with what he's doing. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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it's just another way you'll be traveling at the speed of hertz. with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart. welcome back to "power lunch." we are outside on wall street and that is because we are here
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with a very special guest. sir richard branson joins me. he is on wall street to give some business advice to young entrepreneurs and others who may want to venture out into the business world. they are calling it a conversation in the clouds, which is very apropos, because it also coincides with a relaunch of your new upper class. welcome to power lunch a pleasure to have you here. >> pleasure. >> tell me about conversation in the clouds, the new initiative you are doing right down the street here from me own wall street? >> a fun thing. we have a new book out. >> a new book. i was gonna do that at the end. >> you can do it as well. you can have that one. >> excellent. thank you. >> we are just really having a really sort of fun day with people who have come onto our twitter account, got lots of questions they would like answered and come in person to ask the questions. we are having a lot of fun interaction. >> i was going to say thank you for bringing the london weather with you. >> any time. yeah. >> weather from the island with
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you instead. >> you have had that a hot year in america. i thought we would cool you down a bit p you were boiling over. >> fair enough. nice of to you come out in the rain for us. tell me, you're launching this new upper class and it comes at a time when the economy is still very challenged, especially over in europe. why do the redesign now and how much pricing power do you feel you have with that? >> i think unless you invest in your product, you die. i mean, since i started virgin atlantic 30 years ago, pretty well every single airline competing with us have disappeared. the reason they disappeared, they didn't invest in their product. so you have got too spend hundreds of millions of dollars on a regular basis upgrading your product, upgrading your entertainment systems, upgrading everything about an airline. unless you are in the top two or three air lines in the world, you will never survive. making sure that we chuck out the best upper class and make it an even better upper class,
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hopefully around for another 30 years. >> how do you feel about europe right now the big issue is whether or not spain's going to ask for a bailout. are you optimistic that those countries will be able to pull together and come up with a fiscal union that will be sustainable? >> they have to. they have got no choice. and we can't just let world fall apart. so private businesses can work very hard. they can do their bit. the governments have got to use their fire power to make sure that, you know, one or two of the weaker countries are looked after through this difficult time, then saturday new set of rules to make sure that europe is really strong for the future. that can happen as well. and i think we are -- >> you think the euro will survive? >> i think it's got to survive. and i think it is up to germany and one or two other leaders to make sure it does. >> in terms of the u.s. and the economy here, do you a lot of business globally but certainly
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here in the united states. we are facing a fiscal cliff. does the inaction in washington and the bickering and infighting in washington worry you at all, are you worried at all about the united states going over that fiscal cliff? >> look, i hope that after this election, that the two parties will pull together and do what's right for this country. though having said that, despite all the infighting and bickering, i think it does look like america is back on the right track. i think america is through the worst now. hopefully the next four years will be a lot better than the last four years. >> i want to ask but your book, the title is "richard branson, like a virgin, secret these don't teach you at business school." what is the number one secret they don't teach you at business school that has been responsible for your success, do you think? >> i suspect the number one see jet they don't say, maybe it is better no to the go to business
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school it is better to just get out there and learn to run a business by actually trying to run a business. >> which you did very early on in life? >> yeah. and i think if you look at it a lot of the successful business people, you know, left school quite early on and just went and rolled up their sleeves and gave it a go and you just learn, you know, so much by getting in the jungle and surviving and so my book is not going to be read in any business school in america. >> well, being read on wall street a lot of people are looking at it. so, congratulations, nice to have you with us, join us. >> thank you. cheer he is. >> be still my heart. richard branson. all right, ty, i'm sorry, but -- >> thank you so much for joining us. >> what can i say? >> you know, sue, if i could be one person for 24 hours it would be either richard branson or derek jeter. i don't know which. branson gets such joy out of life in everything he does. >> i think it would be richard
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branson, i really do i really do. >> branson for a day, jeter for a day i guess i will have to be both. >> i think you would be fine either way. gold prices closing right now. sharon epperson tracking the action down at nymex. >> not as much action as there is outside nyse here right now as gold prices have closed. basically seeing a little bit of profit taking today. gold closing around 1775 an ounce. down about $8 or so after, of course, hitting highs of the year in the previous session right around 1794. it really is going to take a close above 1791, according to barclays technical analysts to see a move higher toward that 1900 level. and right now, traders are waiting to see what happens, particularly on friday with the jobs data and see whether deutsche bank is correct it will get that 2200 gold price coming up in 2013. back to you. >> thanks very much. new york attorney general eric schneiderman on "power lunch" just minutes ago telling us why he is going after jpmorgan for fraud in mortgage
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still getting my hair back in shape after being outside all right, about the saudis here on the floor on the nyse floor, i wanted to ask you about transportation average, it was down again today, and the talk was the lack of con fir down jones industrials move to the upside. >> it is not underperforming today but been for weeks on end now. i want to show what you sue has been talking become the dow transport, the last three months, the green line you are looking at for the last three months is now down. the lowest level since june. right near the lows for the year, the s & p 500 stand up, fedex talking about earnings below expectations, that is the
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underperformance you are seeing. a lot of people believe? because the fed reserve is right. speaking of europe, i want to show you something, people get nuts when we talk about spain all the time. why europe all the time? this is the euro, in the last month, versus the s & p 500. as the euro goes, the s and -- the euro leading the s & p 500, not the s & p leading the euro. what happens, it happened in europe, again today, mr. rah hoy in spain, market drooped. to the nasdaq now, bertha coombs following the big numbers there hi, bertha. >> surprising big mover today. take a look, research in motion, rirnlg the big gain on the nasdaq. it's faint praise but fbr raising the price target on rim below where it is now from 6.50 to $6. saying some of the metrics they reported in terms of subscriber growth maybe the company is starting to restructure and stabilize. meantime, google and apple are
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still fighting it out. apple now its iphone 5, according to samsung, infringes on patents in a different suit. microsoft today look at biotext, bob talked about strength in health care today, certainly moving to biotext, 1% today. among the leader there is, i will lumina, london times reporting maybe it could get another bid from roche for a buyout. accord da they are rah put ticks joining the s and p 600 and gill jabbed on fire. to the bond market and the pits and rick santelli is there hi, ricky. >> hi. watching the volatility plum net treasuries, a two-day chart of
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tenures are, side way, the ekg of a calm person, certainly not me. if you open this up to one-week chart, we have been in like a 4 1/2 basis point closing range, going nowhere quickly, hovering in the low 160s. hey, the reserve bank of australia cult rates. look at the intraday chart of the aussie versus the green back. see deterioration there a bit. if want to stick with the currency theme, look at the dollar index year-to-date. of course it got drilled when it expect spd qe 3, once it arrived, a bare uptick, very small, but close to 80. 80 is the key, look at the bottoms on the left, look at the bottom on the right, failure here could mean more downside and sue, they were cheering you on the floor when you did your interview with the new york ag and you know what they were screaming? that you should send him a copy of the september 30, 1999, "new york times" piece that said fannie mae eases credit to aid in mortgage lending.
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>> right. >> why doesn't he prosecute them? >> i think that's big question. >> there we go they are cheering in chicago. i just think we all remember those dark days of '08, rick, and we all remember when jpmorgan chase pushed back about buying bear sterns. >> they didn't want t then the government's smirk about t they pushed bear sterns into their lap and now that they are not going to prosecute mr. paulson for anything because he was smart enough to get intestimonification. maybe jamie dimen should have talked to some of us and got indemnification on that raw deal. >> maybe so love to hear from mr. dimon, certainly welcome his comments. >> never know how rick feels.
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u.s. attorney general eric shah fired inman earlier on making his kate why woe go after jp morning, or rick would have it fannie mae, or individuals for alleged fraud. kayla tausche with what is ahead for the banks. schneiderman is clear this is not the last. >> he was clear about that many say perhaps government should be going after the government on this, because that is what aed through to happen. but schneiderman insists more cases of mortgage fraud are on the way. but investors only protecting themselves through options, don't appear to be fleeing the stocks just yet as you can see from the board. fundamentals are looking up in house, according to analysts, among them, dick bove. and they have built up reserves for situations just like this and analysts and investors said that jpmorgan has between 12 and 16 billion set aside for situations like. this while they don't necessarily cover everything, they do give investors
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confidence that losses are contained. shares of bank of america and citi barely bunnelled on news of their recent settlements. five banks, tyler, including jpmorgan chase are chipping away at a $25 billion settlement reached in june with feds over foreclosures. for that reason, citi mortgage's ceo told diana olick today that he doesn't think it would hit the balance sheet. what investors fear most is the legacy mortgage cases will paige in comparison to bigger legal obstacles facing banks in the coming months, namely l ll lly iran. where sanctions are concerned, several settlements, including standard are coming down the pike. jp morgue continueself is also nearing settlement over faulty safeguards in place to deem with these sanctions. issues this could hurt the stocks. for now, tyler, investors
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believe until they see a number, they are not buying it, not selling. >> when you refer to sanctions in that context, you are talking about the iran sanctions? >> the iran sanctions, some dealing with libya, some myanmar, a lot of banks fingered over this no real numbers and's what investors fear. >> thank you very much. with millions out of work and struggling to find jobs, who's really creating jobs in america? we are going to tell you and it will surprise you. we will be right back. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride.
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addicted to budgetary crystal meth. strong statement. maybe's fan of "breaking bad." we will find out. you guys interviewed new york's top top kopp about the state's big lawsuit against jpmorgan. we are going to ask former fdic shelia bare all about that. and then, it's the guessing game. go to a city that is 21 billion dollars in debt. it has already issued a very dire warning for residents, you better hope you don't live there. it is a clue to our mystery see. see you at the top of the hour. investors gearing up for this friday's crucial employment report and tomorrow's debates w more than 12 million people out of work, jobs front and center in the presidential election and they say, of course, everybody says, small business is the biggest creator of jobs. is that really the case snow the focus of the october issue of "ink" magazine. joining me in the stud jolt editor and chief of the magazine.
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>> tyler, nice to be here. >> there is a perceived wisdom that small companies, broadly speaking, create 60, 70% of all american net new jobs. true? >> everybody thinks t everybody's wrong. they don't create the jobs. now, they do create jobs but they also destroy jobs. what you want to see, if you have any interest in the economy or if you are a politician, is net job generation. jobs that will still be around in five or six years. >> if i looked at all of the small companies and what they created, what they ended what they killed, would it be a zero, zero out, roughly? zero. only a small sliver of small companies create jobs and the characteristic there is not that they are small, is it is that they are growth companies. >> is not their size so much as their growth trajectory. not their youth, not thank that they are new, but they are growing. are they the smallest of the small companies are they the bigger of the small companies? >> it doesn't matter. the size really doesn't matter.
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very happy to hear that. >> don't save the economy by putting a dry cleansers or duncan doughnuts on every corner a lot of growth companies creating jobs are mail of but not all of them by any means and the growth companies that create the most jobs are fairly large. >> so, we have this sort of fetish in policy making circles that we have got to -- we have got to help the startups, we got to throw money at small companies but really, what you need do is target the fast growing companies with whatever policy you will throw at it, right? >> i don't know how to break it to you, everything politicians say is not always true. >> no. >> a lot of bad policy that come you the of this belief, money thrown at small businesses or worse, government decides, you know, the future is green energy and throw a lot of money at any small company that gets in the green energy field that creates
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a lot of problems. load up on debt. they don't -- they lack market discipline. they expand capacity beyond demand and what you end up with is sol lynn draft. >> so, what could government do effectively to help not the small young companies, necessarily but the smaller, fast-growing companies? what in your article you call the gazelles? >> the gazelles. one thing could you do is think about what growth companies do, they are always expanding, outgrow their office, their factory, what happens when they do that they run into a lot of luke roarcracy, building permits, environmental impact statements. what government can do is clear out the bureaucracy, take a concierge approach. >> let us help you that helps you be local then rather than state or federal right? >> that's right. most of the on obstacles are local. >> feed the gazelles but not with cheap capital government subsidies that causes those growth companies to take their
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eye off the ball. >> giving cheap money away is not good government policy. what you ought to do is guard and the companies, the growth companies in your area and help them grow. >> and finally, one thought on job training, where you think in ink magazine, federal government and state government has gone wrong is by aiming job training efforts at really entry level position. you think it ought to be higher up the food chain? >> a lot of job training is turning unemployable people into barely employable people. what holds growth people up is take the entry level people and line works and turning them into supervisors. when do you that you can expand more easily. where government can come in and help. >> eric, thanks very much, great article in the issue who really create the jobs. sue? >> ty, thank you. fascinating conversation. on the other side of the break, we are analyzing the analyst and on deck, devon energy, ken ross gold and citi. before the break, some of the tuesday movers. power is back in two.
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you were here yesterday.
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we got outspaced. welcome. rbc capital upgrading kinross gold. do you like the call? >> i do. very speculative. a couple of issues i think they can take care of. we will see. one of them a surplus tax from ecuador. they are not going to be able to do that, take care of that but i think they can work around that and then -- >> so you say go ahead. government ahead. >> you are with it? upgrading comstock resources and devon energy, noting notice belief that, "the u.s. natural gas market fundamentals already gone substantial structural "" -- do you like the call or not? >> i live in the center of marsellus gas. >> you do. >> i they are producing below the cost of goods sold. i don't like that i don't see a
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change in that . >> don't like two you do like one. i like you because you disagree. next hour, remember the datson? we are going to look at the rebirth of the car on the cheap. but there's a catch. the new datson, next hour. accolade overdrive.
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we are back on "power lunch." watching shares of ancestry.com. check out this chart, spiking on talks that buyout talks have resumed, a report from bloomberg but down on the idea this might be at levels that investors don't like so much. sue, the magic number here is 32. >> yikes. thank you very much, kayla. appreciate it. let's check the markets right now the dow jones industrial averages down about 63 points. been in a really narrow range. keep in mind, w

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